India's Neobanking Market Is Expected To Grow Three Folds By FY25 To $11.65 Billion
According to a recent industry report, the neo-banking market of India is anticipated to grow by three folds by FY25 to reach $11.65 billion (almost Rs 92,000 crore).
According to a report by Grant Thornton Bharat, there is a sizable opportunity for neo banking to add value to a sizable segment of the customer base in India due to the market’s immense size, all the while utilizing the large talent pool at its disposal to develop high-quality technology-driven banking products.
The market for neo banking is well positioned to take advantage of the expanding digital economy and experience rapid growth thanks to a very active local market with significant upside in terms of the potential for revenue generation, it claimed.
At $3.42 billion as of FY22, the Indian neo-banking market is projected to increase at a three-year compound annual growth rate (CAGR) of 50.5% to reach $11.65 billion by FY25.
Neobanks are branchless digital banks that engage with clients directly and offer a seamless banking experience.
Neobanks are creating their products with the approval of the relevant regulators, or curating and delivering completely online, specialized financial services products.
Currently, neither the RBI recognizes nor oversees purely virtual banks.
According to the report, the regulator must ensure clear regulation, regular oversight, and monitoring.
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With more than 50% of the population under the age of 28, India’s growth story depends heavily on its youthful population. According to the report, the first generation of banking industry workers born into the digital age will determine future consumer trends.
The expectations of this generation regarding the products, services, and transaction experience from their banks are very different. They rarely visit branches for transactions.
The neo-banking sector may face difficulties from established players, their dependence on banks, security issues, regulatory ambiguity, increased competition from fintech, and super-apps that combine elements of e-commerce, payments, and financial services into one platform, according to Jaikrishnan G, Partner, Financial Services.
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